Whalesbook
Sustained manufacturing demand and increasing outsourcing of logistics operations by companies are the main drivers of the sector's strong growth.
Key Demand Drivers
Manufacturing companies, including automotive, engineering, and energy firms, accounted for 48% of total leasing activity, leasing 9.3 million sq. ft. This expansion shows companies are broadening their supply chains globally.
The third-party logistics (3PL) segment secured a 33% market share, with leasing volumes jumping 64% to 6.4 million sq. ft. This surge was largely concentrated in Mumbai and the National Capital Region (NCR).
Market Trends and Rents
While e-commerce leasing saw a sharp 71% decline year-on-year, suggesting a shift in online retail warehousing needs, retail leasing more than doubled. Warehousing rents rose across major markets due to high occupier demand and increasing land costs. Chennai posted the highest rental appreciation at 7% annually, though Pune remained the costliest market at ₹28.5 per sq. ft. per month.
Future Outlook and Challenges
The total warehousing stock across eight key cities reached 568 million sq. ft. by the end of Q1 2026, with vacancy rates holding steady at 11.1%. Institutional-grade Grade A warehousing now makes up 46% of this stock. Despite the positive trends, Shishir Baijal, chairman and managing director at Knight Frank India, commented that land availability and regulatory hurdles remain significant challenges that could limit future supply.